Principles of Managerial Accounting - Chapter 24 Test

Mason Corporation had $650,000 in invested assets, sales of $700,000, operating income amounting to $99,000, and a desired minimum return on investment of 15%. The residual income for Mason Corporation is

$1,500

The profit margin is the ratio of

operating income to sales

Which of the following expressions is termed the profit margin factor as used in the DuPont formula for determining the return on investment (ROI)?

Operating Income / Sales

ABC Corporation has three support departments with the following costs and cost drivers: Support Department Cost Cost Driver Graphics Production $200,000 Number of copies made Accounting 500,000 Number of invoices processed Personnel 400,000 Number of employees ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information is as follows: Micro Macro Super Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices processed 700 800 500 Number of employees 130 145 125 The support department allocation rate for the Personnel Department is

$1,000

ABC Corporation has three support departments with the following costs and cost drivers: Support Department Cost Cost Driver Graphics Production $200,000 Number of copies made Accounting 500,000 Number of invoices processed Personnel 400,000 Number of employees ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information is as follows: Micro Macro Super Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices processed 700 800 500 Number of employees 130 145 125 The support department allocation rate for Graphics Production is

$2.00

ABC Corporation has three support departments with the following costs and cost drivers: Support Department Cost Cost Driver Graphics Production $200,000 Number of copies made Accounting 500,000 Number of invoices processed Personnel 400,000 Number of employees ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information is as follows: Micro Macro Super Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices processed 700 800 500 Number of employees 130 145 125 The support department allocation rate for the Accounting Department is

$250

Mason Corporation had $650,000 in invested assets, sales of $700,000, operating income amounting to $99,000, and a desired minimum return on investment of 15%. The investment turnover (rounded to two decimal places) for Mason Corporation is

1.08

ABC Corporation has three support departments with the following costs and cost drivers: Support Department Cost Cost Driver Graphics Production $200,000 Number of copies made Accounting 500,000 Number of invoices processed Personnel 400,000 Number of employees ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information is as follows: Micro Macro Super Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices processed 700 800 500 Number of employees 130 145 125 The operating income of the Micro Division after all support department allocations will be

$305,000

ABC Corporation has three support departments with the following costs and cost drivers: Support Department Cost Cost Driver Graphics Production $200,000 Number of copies made Accounting 500,000 Number of invoices processed Personnel 400,000 Number of employees ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information is as follows: Micro Macro Super Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices processed 700 800 500 Number of employees 130 145 125 The support department cost that will be allocated to the Micro Division is

$345,000

ABC Corporation has three support departments with the following costs and cost drivers: Support Department Cost Cost Driver Graphics Production $200,000 Number of copies made Accounting 500,000 Number of invoices processed Personnel 400,000 Number of employees ABC has three operating divisions, Micro, Macro, and Super. Their revenue, cost, and activity information is as follows: Micro Macro Super Revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices processed 700 800 500 Number of employees 130 145 125 The operating income of the Micro Division after all support department allocations will be

$350,000

Chicks Corporation had $1,100,000 in invested assets, sales of $1,210,000, operating income amounting to $302,500, and a desired minimum return on investment of 15%. The profit margin for Chicks Corporation is

25%

Blaser Corporation had $275,000 in invested assets, sales of $330,000, operating income amounting to $33,000, and a desired minimum return on investment of 7.5%. The return on investment (rounded to one decimal place) for Blaser Corporation is

12.0%

Mason Corporation had $650,000 in invested assets, sales of $700,000, operating income amounting to $99,000, and a desired minimum return on investment of 15%. The profit margin (rounded to one decimal place) for Mason Corporation is

14.1%

Marshall Corporation had $220,000 in invested assets, sales of $242,000, operating income of $66,000, and a desired minimum return on investment of 3%. The return on investment (rounded to one decimal place) for Marshall Corporation is

30.0%

Using the following data for Ace Guitar Company: A Region B Region Sales $500,000 $900,000 Cost of goods sold 200,000 300,000 Selling expenses 150,000 275,000 Support department expenses: Amount Purchasing $90,000 Payroll accounting 30,000 Allocate support department expenses proportional to the sales of each region. Determine the divisional operating income for the A and B regions. For interim calculations, round percentages to one decimal place and all other amounts to the nearest whole dollar.

A Region Operating Income $107,160 B Region Operating Income $247,840

Some organizations use internal support departments to provide like services to several divisions or departments within an organization. Which of the following would probably lend itself as a support department?

All of these choices Human Resources Department Payroll Accounting Department Information Systems Department

Using these data from Terrace Industries: District 1 District 2 Sales $300,000 $600,000 Cost of goods sold 120,000 150,000 Selling expenses 55,000 75,000 Support department expenses: Amount Purchasing $70,000 Payroll accounting 80,000 Allocate support department expenses proportional to the sales of each district. Determine the divisional operating income for Districts 1 and 2. For interim calculations, do not round. For all other amounts, round to the nearest whole dollar.

District 1 Operating Income $75,000 District 2 Operating Income $275,000 Percentage of sales allocation: District 1 = $300,000 ÷ $900,000 = 33.3% District 2 = $600,000 ÷ $900,000 = 66.7% District 1 = 33.3% × $150,000 = $50,000 allocation of support department expenses District 1 Operating Income = $300,000 - $120,000 - $55,000 - $50,000 = $75,000 District 2 = 66.7% × $150,000 = $100,000 allocation of support department expenses District 2 Operating Income = $600,000 - $150,000 - $75,000 - $100,000 = $275,000

A department store allocates payroll costs on the basis of the number of payroll checks issued. Accounting costs are allocated on the basis of the number of reports. The payroll costs for the year were $231,000, and the accounting costs for the year totaled $75,500. The departments and the number of payroll checks and accounting reports for each are as follows: Department Number of Payroll Checks Number of Reports Department R 483 70 Department S 1,470 85 Department T 147 345 a. Determine the amount of payroll costs. b. Determine the accounting costs to be allocated to each department.

a. Department R $53,130 Department S $161,700 Department T $16,170 Total $231,000 b. Department R $10,570 Department S $12,835 Department T $52,095 Total $75,500

Ralston Company has operating income of $75,000, invested assets of $360,000, and sales of $790,000. Use the DuPont formula to compute the return on investment (ROI), and show (a) the profit margin, (b) the investment turnover, and (c) the return on investment. Round the profit margin percentage to two decimal places, the investment turnover to three decimal places, and the return on investment to two decimal places.

a. Profit Margin 9.49% b. Investment Turnover 2.194 c. Return on Investment 20.82%

For higher levels of management, responsibility accounting reports

are more summarized than for lower levels of management

To compute operating income, total support department allocations are

subtracted from operating income before support department allocations

Which of the following is a measure of a manager's performance working in a profit center?

the divisional income statements